Sacrificing ratio in partnership accounting – The ratio in which an existing partner is ready to sacrifice his share of profit to another partner is known as sacrificing ratio.
The formula for sacrificing ratio is :
Sacrificing Ratio = New Ratio – Old ratio
Sacrificing Ratio in Partnership Accounting : Example 1
A , D and K are partners sharing profits and losses in the ratio of 5 : 5 : 2 respectively. A sacrifices 1/4 of his share and D sacrifices 1/4 of his share in favour of K .What will be the sacrificing ratio between partners.
Explanation : –
Sacrificing ratio = Old ratio – New ratio
A = 5/12 – 15/48
= (20-15)/48
= 5/48
D = 5/12 – 15/48
= (20-15)/48
= 5/48
5 : 5
Sacrificing Ratio in Partnership Accounting : Example 2
Abra and Dabra are partners sharing profits and losses in the ratio of 6 5 respectively. A new partner Cabra
is admitted into partnership for 10 % share in prots.What will be the sacrificing ratio between partners?
Explanation : –
Let total prot of the firm = 1
is admitted into partnership for s share = 10% = 10/100 = 1/10
Remaining prot after admission of is admitted into partnership for = 1 – (1/10)
= (10-1)/10
= 9/10
Abra will get 6/11 of 9/10 = 54/110
Dabra will get 5/11 of 9/10 = 45/110
New profit sharing ratio between Abra , Dabra and is admitted into partnership for
= 54/110 : 45/110 : 1/10
= (54:45:11)/110
= 54 : 45 : 11
Sacrificing ratio = Old ratio – New ratio
Abra = (6/11) – (54/110)
= (60-54)/110
= 6/110
Dabra = (5/11) – (45/110)
= (50-45)/110
= 5/110
Sacrificing ratio = 6 : 5
Sacrificing Ratio in Partnership Accounting : Example 3
Good and Better are partners sharing profits and losses in the ratio of 7 and 5 respectively. A new partner
Best is admitted into partnership for 10 % share in prots.What will be the sacrificing ratio between partners?
Explanation : –
Let total profit of the firm = 1
Best s share = 10% = 10/100 = 1/10
Remaining prot after admission of Best = 1 – (1/10)
= (10-1)/10
= 9/10
Good will get 7/12 of 9/10 = 63/120
Better will get 5/12 of 9/10 = 45/120
New profit sharing ratio between Good , Better and Best
= 63/120 : 45/120 : 1/10
= (63:45:12)/120
= 63:45:12
Sacrificing ratio = Old ratio – New ratio
Good = (7/12) – (63/120)
= (70-63)/120
= 7/120
Better = (5/12) – (45/120)
= (50-45)/20
= 5/120
Sacrificing ratio = 7 : 5
Sacrificing Ratio in Partnership Accounting : Example 4
Kaya and Maya are partners sharing profits and losses in the ratio of 5 and 3 respectively. A new partner
Saya is admitted into partnership for 40 % share in prots.What will be the sacrificing ratio between partners?
Explanation : –
Let total prot of the firm = 1
Saya s share = 40% = 40/100 = 4/10
Remaining prot after admission of Saya = 1 – (4/10)
= (10-4)/10
= 6/10
Kaya will get 5/8 of 6/10 = 30/80
Maya will get 3/8 of 6/10 = 18/80
New profit sharing ratio between Kaya , Maya and Saya
= (30/80) : (18/80) : (4/10)
= (30:18:32)/80
= 30:18:32
Sacrificing ratio = Old ratio – New ratio
Kaya = 5/8 – 30/80
= (50-30)/80
= 20/80
Maya = (3/8) – (18/80)
= (30-18)/80
= 12/80
Sacrificing ratio = 20 : 12
Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner